A variety of payment services exist. Some services provide electronic payment capabilities through Automated Clearing House (ACH) wire transfers or through proprietary electronic transfers conducted within a payment service system environment. Transactions conducted with such proprietary systems typically require both the payer and the payee in a transaction to have an account with the payment service used. Such services typically have a revenue model that takes a percentage fee from transfers within the system.
Some payment services provide paper money orders which may be negotiable. A typical paper money order system provides, however, no ability to make electronic transfers. Also, cancellation of a typical paper money order after issue usually requires a trip to a bank or waiting for papers to be mailed to the payment service and back. Further, many typical money orders are fully negotiable when issued, and may not have a named payee identified when issued. Such characteristics make typical money orders vulnerable to theft and fraud.
Some other types of payment systems are traditional checking accounts or credit and debit cards. Many consumers without a good credit history as well as those with low income are routinely denied credit cards. Many such consumers cannot obtain checking accounts that include debit cards. Some modern debit card systems may, however, provide accounts to such consumers. Debit system operators take, however, 2-3% or more in fees from the typical debit card transaction. Further, a debit card account is not suited for many payment scenarios. For example, typically only businesses are able to receive debit card payments. A consumer who needs to transfer money to another consumer and cannot deliver cash, cannot be served by the typical debit card system. Funding of a card is difficult as well.
Traditional payment systems are also quite vulnerable to fraud and theft. For example, typical credit card and checking systems do not conduct a pre-verification of transactions. Pre-verification processes may facilitate ease of use, trust, and transactions between remote parties. Further, the typical checking account arrangement provides opportunities for fraud using stolen and forged checks. Credit card numbers may be misappropriated at a business or on the internet. Many payment systems are exploited by dishonest customer service representatives or other administrators who enter or allow fraudulent transactions.
What is needed, therefore, is a payment system that allows electronic or paper transfers, provides negotiable and verifiable payment instruments, and allows for various types of transactions to be conducted between various parties while suppressing fraud.